USDCAD Stalls At Resistance Following BOC

BOC Holds Rates SteadyThe Canadian Dollar has been a little firmer on the back of the September BOC meeting yesterday. The bank held rates unchanged at 5%, as expected, though signalled that further tightening might still be warranted given the inflation backdrop. In its decision, the BOC acknowledged that the domestic economic outlook had softened, citing the easing of excess demand as a result of its monetary policy decisions. However, the BOC noted that it was still concerned about the persistence of inflation at current levels and warned that it stood ready to tighten further if deemed necessary.Hawkish HoldSuch an outcome and set of guidance was broadly expected. Whether the BOC hikes again remains to be seen, but warning that further tightening is still an option at least helps mitigate heavy CAD selling. This was a very different pausing message to the one we heard in January this year which heralded a heavy CAD sell off and ultimately saw the bank forced back into tightening.Market View ShiftingThe general consensus among market players is that, barring any upside inflationary shock, the BOC is likely done with tightening and traders will now be closely monitoring incoming CAD data with a view to gauging when the first cuts will likely take place next year. As such, CAD is likely to trade lower off any weaker econ data and firmer on any upside surprises.Technical ViewsUSDCADFor now, the Loonie remains capped by the 1.3683 level resistance. Bearish divergence on momentum studies raises risks of a near-term reversal. However, while the 1.3501 level holds as support, the focus remains on a further push higher and an eventual breakout towards 1.3839 next. Notably, we have a sell signal in the Signal Centre today at 1.36 targeting a move back down through 1.35